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Bridgepoint Education Reports Second Quarter 2011 Results

8/2/2011

Apple(TM) and Android(TM) Mobile Apps Launched for Ashford and Rockies Students and Faculty

SAN DIEGO, Aug. 2, 2011 /PRNewswire via COMTEX/ --

Bridgepoint Education (NYSE: BPI), a provider of postsecondary education services, announced today its results for the three months ended June 30, 2011.

Highlights for the second quarter ended June 30, 2011, are as follows:

  • Total student enrollment at period end was 84,545.
  • Revenue increased to $239.9 million from $173.8 million for the same period in 2010.
  • Operating income increased to $82.5 million from $59.2 million for the same period in 2010.
  • Net income was $52.1 million compared with $35.3 million for the same period in 2010.
  • Fully diluted earnings per common share was $0.90 compared with $0.58 for the same period in 2010.
  • Repurchased 1.9 million shares, at an average price per share of $23.15, for a total of $43.7 million during the second quarter.

"During the first half of 2011, our institutions continued to make progress on key initiatives to improve the academic readiness of students and to provide students with an innovative, high quality learning experience. Our deep commitment to enhancing access through technology was evident in the introduction of new Android(TM) and Apple(TM) mobile apps, as well as the improved Constellation(TM) iPad(TM) app," said Andrew Clark, Chief Executive Officer of Bridgepoint Education.

Student Enrollment

Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, increased to 84,545 students at June 30, 2011, compared with 67,744 students at the end of the second quarter of 2010.

New student enrollments for the second quarter of 2011 at Bridgepoint Education's academic institutions were approximately 19,050, compared with combined new student enrollments of approximately 18,450 for the same period in 2010.

Financial Results

Revenue for the second quarter of 2011 was $239.9 million, compared with revenue of $173.8 million for the same period in 2010. Revenue for the six months ended June 30, 2011, was $469.3 million, compared to $329.9 million for the same period in 2010.

Operating income for the second quarter of 2011 was $82.5 million compared with operating income of $59.2 million for the same period in 2010. Operating income for the six months ended June 30, 2011 was $168.7 million compared to $109.3 million for the same period in 2010.

Net income for the second quarter of 2011 was $52.1 million compared with net income of $35.3 million for the same period in 2010. Net income for the six months ended June 30, 2011 was $106.1 million compared to $65.1 million for the same period in 2010.

Fully diluted earnings per common share for the second quarter of 2011 was $0.90 compared with $0.58 for the same period in 2010. Fully diluted earnings per common share for the six months ended June 30, 2011, was $1.82 compared with $1.07 for the same period in 2010.

The Company's effective tax rate for the second quarter of 2011 was 37.3%.

Balance Sheet and Cash Flow

As of June 30, 2011, the Company had cash, cash equivalents and marketable securities of $357.4 million, compared with $299.1 million as of December 31, 2010. The Company generated $116.2 million of cash from operating activities in the six months ended June 30, 2011, compared with $45.4 million for the same period in 2010.

During the three months ended June 30, 2011, the Company repurchased 1.9 million shares, at a weighted average price of $23.15 per share, for a total cost of $43.7 million. As of June 30, 2011, approximately $36.4 million remains available under the share repurchase programs approved by the Company's Board of Directors, which may be suspended at any time.

Full-Year 2011 Outlook

Based on the results in the second quarter of 2011, the Company is updating its full year 2011 guidance as follows:

  • Total student enrollment is expected to be between 79,500 and 83,500.
  • Revenue is expected to be between $886.5 million and $901.5 million.
  • Net income is expected to be between $148.3 million and $155.2 million.
  • Fully diluted earnings per common share is expected to be between $ 2.56 and $2.68 based on an estimated fully diluted weighted average share count of 57.9 million for the year ending December 31, 2011.
  • Bad debt as a percentage of revenues for 2011 is expected to be 5.4%.
  • Capital expenditures for 2011 are expected to be between 4.5% and 5.0% of revenue.
  • The Company's effective tax rate for 2011 is estimated to be 37.8%.

This guidance does not reflect the impact of any additional share repurchases the Company may complete during the remainder of 2011.

Earnings Conference Call and Webcast

Bridgepoint Education will host a conference call at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States / Canada is (888) 661-5144 and for international callers is (913) 312-1517. The access code for all callers is 8178745. A live webcast will also be available on the Company's website at www.bridgepointeducation.com.

A replay of the call will be available via telephone through August 9, 2011. To access the replay, dial (888) 203-1112 in the United States / Canada and (719) 457-0820 outside the United States; then enter the access code 8178745.

About Bridgepoint Education

Bridgepoint Education's postsecondary education services focus on offering associate's, bachelor's, master's and doctoral programs in such disciplines as business, education, psychology, social sciences and health sciences. Bridgepoint Education's regionally accredited academic institutions - Ashford University and University of the Rockies - deliver their programs online as well as at traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of financial resources. These forward-looking statements are based on assumptions and estimates including, without limitation, those regarding: the Company's value proposition to students; competitiveness of the Company's tuition; ability to continue to transfer credits from other institutions; ability to maintain and improve the quality of the Company's education; management of future growth and scalability; development of military and corporate channels; estimates of new hires; proposed new programs; expectations that the Company can effectively manage the business within the regulatory environment; expectations regarding enrollments, financial position, results of operations and liquidity; projections, predictions, expectations, estimates or forecasts as to the Company's business, financial and operational results and future economic performance; management's goals and objectives; and other similar matters that are not historical facts. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions, as well as statements in the future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Forward-looking statements should not be interpreted as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: the Company's inability to adequately resolve the findings and recommendations of the final audit report of the U.S. Department of Education's Office of Inspector General; the imposition of fines or other corrective measures against the Company's academic institutions; the Company's failure to comply with the extensive regulatory framework applicable to its industry, including Title IV of the Higher Education Act and its regulations, state laws and regulatory requirements, and accrediting agency requirements; adverse regulatory or legislative changes affecting the Company's industry; the Company's inability to continue to develop awareness among, to recruit and to retain students; competition in the postsecondary education market and its potential impact on the Company's market share, recruiting cost and tuition rates; reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions; the Company's ability to attract and retain the personnel needed to sustain and grow its business; the Company's inability to develop new programs or expand its existing programs in a timely and cost-effective manner; economic or other developments potentially impacting demand in the Company's core disciplines or the availability or cost of Title IV or other funding; and other factors discussed in the risk factors included in Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed on or about the date hereof, and in other reports the Company may file with the Securities and Exchange Commission from time to time.

Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.

Contact:
Paul Goodson, Associate Vice President of Investor Relations
866.475.0317 x2271 investorrelations@bridgepointeducation.com

BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)



Three Months Ended
June 30,


Six Months Ended
June 30,


2011


2010


2011


2010

Revenue

$ 239,880


$ 173,840


$ 469,313


$ 329,907

Costs and expenses:








Instructional costs and services

62,012


43,257


117,821


82,693

Marketing and promotional

62,188


50,096


121,154


94,309

General and administrative

33,131


21,257


61,677


43,588

Total costs and expenses

157,331


114,610


300,652


220,590

Operating income

82,549


59,230


168,661


109,317

Other income, net

(657)


(370)


(1,330)


(617)

Income before income taxes

83,206


59,600


169,991


109,934

Income tax expense

31,057


24,330


63,923


44,841

Net income

$ 52,149


$ 35,270


$ 106,068


$ 65,093

Earnings per common share:








Basic

$ 0.99


$ 0.65


$ 2.00


$ 1.19

Diluted

$ 0.90


$ 0.58


$ 1.82


$ 1.07

Weighted average number of common shares outstanding used in computing earnings per common share:








Basic

52,911


54,608


52,943


54,490

Diluted

57,939


60,728


58,253


60,613


BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)



As of
June 30, 2011


As of
December 31, 2010

ASSETS




Current assets:




Cash and cash equivalents

$ 210,495


$ 188,518

Restricted cash

25


25

Marketable securities

78,032


90,611

Accounts receivable, net

78,685


58,415

Deferred income taxes

7,039


7,039

Prepaid expenses and other current assets

13,267


12,650

Total current assets

387,543


357,258

Property and equipment, net

75,500


66,542

Marketable securities

68,837


20,000

Goodwill and intangibles, net

5,209


4,123

Deferred income taxes

15,845


15,845

Other long-term assets

8,566


7,457

Total assets

$ 561,500


$ 471,225

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$ 3,081


$ 5,076

Accrued liabilities

47,618


34,895

Deferred revenue and student deposits

180,730


173,576

Total current liabilities

231,429


213,547

Rent liability

14,191


10,910

Other long-term liabilities

8,538


8,527

Total liabilities

254,158


232,984

Total stockholders' equity

307,342


238,241

Total liabilities and stockholders' equity

$ 561,500


$ 471,225


BRIDGEPOINT EDUCATION, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



Six Months Ended
June 30,


2011


2010

Cash flows from operating activities




Net income

$ 106,068


$ 65,093

Adjustments to reconcile net income to net cash provided by operating activities:




Provision for bad debts

23,614


16,262

Depreciation and amortization

5,572


3,776

Amortization of premium/discount

1,380


(12)

Deferred income taxes

--


(13)

Stock-based compensation

4,796


3,681

Excess tax benefit of option exercises

(10,365)


(757)

Loss on disposal of fixed assets

11


--

Changes in operating assets and liabilities:




Accounts receivable

(43,884)


(54,547)

Prepaid expenses and other current assets

360


(3,131)

Other long-term assets

(1,109)


(934)

Accounts payable and accrued liabilities

19,276


7,899

Deferred revenue and student deposits

7,154


3,458

Other liabilities

3,292


4,638

Net cash provided by operating activities

116,165


45,413

Cash flows from investing activities




Capital expenditures

(12,477)


(12,060)

Purchases of marketable securities

(114,115)


(5,009)

Capitalized curriculum development costs

(1,333)


(259)

Maturities of marketable securities

75,500


30,000

Net cash (used in) provided by investing activities

(52,425)


12,672

Cash flows from financing activities




Proceeds from the exercise of stock options

3,577


411

Excess tax benefit of option exercises

10,365


757

Proceeds from the issuance of stock under employee stock purchase plan

642


501

Proceeds from the exercise of warrants

79


1,188

Repurchase of common stock

(56,426)


--

Payments of capital lease obligations

--


(634)

Net cash (used in) provided by financing activities

(41,763)


2,223

Net increase in cash and cash equivalents

21,977


60,308

Cash and cash equivalents at beginning of period

188,518


125,562

Cash and cash equivalents at end of period

$ 210,495


$ 185,870

Supplemental disclosure of non-cash transactions:




Purchase of equipment included in accounts payable and accrued liabilities

$ 3,524


$ 810


SOURCE Bridgepoint Education, Inc.

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